Realizing the American Dream Are You Ready to Buy a Home?

Agenda Is owning a home right for you How you buy a home Your homeownership team Mortgage payment and other costs How much you can afford Qualifying ratios

Advantages of Homeownership Stable housing costs Tax benefits Equity Control over your environment Stability

Disadvantages of Homeownership Monthly costs No guarantees Maintenance and repairs Decreased mobility Fewer features included

Steps in the Homebuying Process Attend homeownership education class Determine how much you can afford Meet with lender for pre-approval Determine wants and needs in a home Shop for a home

Steps (Cont’d) Make an offer Have professional home inspection Apply for mortgage loan Obtain homeowners insurance Close the loan

Your Homebuying Team Homeownership Counselor Real Estate Agent Lender Attorney or Escrow Agent Title Insurance Agent Home Inspector Appraiser Surveyor Homeowners Insurance Agent

The Mortgage Payment P rincipal I nterest T axes I nsurance

Costs of Buying a Home Upfront Costs Down payment Closing costs Escrows Reserves Moving costs Ongoing Costs Mortgage payment Utilities Maintenance and repairs

The 4 Cs of Credit C apital C apacity C redit History C ollateral

Ordering a Credit Report Experianwww.experian.com (800) TransUnionwww.transunion.com (800) Equifaxwww.equifax.com (800)

How Much Can You Afford? $36,000 ($3,000/mo.) 5%–10% of monthly income Income Debts 2.5 – 3 times Home Price $90,000 – $108,000

Qualifying Ratios 62%33% 5% 38% for housing plus all other long-term debt Housing 33% Debts 5% Other Expenses 62% Expenses 62%

Prequalification Financial Calculations  How much money the lender will lend you  What price home you can afford  How much down payment you need  How much your monthly payments will be This is not a guarantee

Summary Pros and cons of ownership Key steps and professionals involved in the homebuying process Mortgage payment and other costs How lenders determine creditworthiness and affordability

Next Steps  Sign up for education or counseling  Order copies of your credit report